Big Tech antitrust concerns draw state AGs’ attention

Add a cohort of state attorneys general to the growing list of government gumshoes pursuing the nation’s tech giants over whether their market clout has stifled competition and innovation.

Assistant Attorney General Makan Delrahim, the Justice Department’s top antitrust official, said Tuesday that the department is coordinating with more than a dozen state attorneys general seeking to wade into the antitrust fray over concerns about anti-competitive behavior.

“I think it’s safe to say that we’re all in the same place, having had conversations with the state attorneys general,” Mr. Delrahim said at the Technology Policy Institute conference in Aspen, Colorado.

His comments in an on-stage interview with CNBC’s Brian Sullivan followed reports that a bipartisan coalition of state attorneys general plans to launch as soon as next month a multistate antitrust investigation into major technology companies, including such household names as Facebook, Amazon, Apple and Alphabet, which owns Google.

Mr. Delrahim offered no details on which states are involved, although he said “a couple of dozen state attorneys general have expressed an interest in the subject matter.”

’A couple of dozen’ states are eyeing Big Tech probes: DOJ official @CNBC https://t.co/S5UI7wMfH1

— Brian Sullivan (@SullyCNBC) August 20, 2019

An investigation by state prosecutors, first reported by The Wall Street Journal, would join probes already underway by the Justice Department and the House Judiciary antitrust subcommittee, led by Rep. David N. Cicilline, Rhode Island Democrat.

State prosecutors have been circling Silicon Valley for months. Texas Attorney General Ken Paxton, a Republican, and seven others met in June with U.S. Attorney General William P. Barr “to talk about the real concerns consumers across the country have with Big Tech companies stifling competition on the internet.”

“It was a productive meeting, and we’re considering a range of possible antitrust actions against such companies,” the attorneys general said in a statement afterward.

The office of New York Attorney General Letitia James, a Democrat, released a statement Tuesday acknowledging that “we continue to engage in bipartisan conversations about the unchecked power of large tech companies.”

“We must ensure we protect competition, protect our economy, and protect consumers,” the statement said. “The attorneys general involved have concerns over the control of personal data by large tech companies and will hold them accountable for anticompetitive practices that endanger privacy and consumer data.”

Mississippi Attorney General Jim Hood, a Democrat, cited the recently formed Tech Industry Working Group, a multistate subgroup of the National Association of Attorneys General Antitrust Workforce, which looks at “the intersection of technology and antitrust.”

“I continue to be concerned with the aggregation of data in the hands of a few and am always watchful of any monopoly,” Mr. Hood said in an email. “As attorneys general, we need to evaluate and address specific conduct, utilizing our existing antitrust and consumer protection laws.”

North Carolina Attorney General Josh Stein, a Democrat, is “participating in bipartisan conversations about this issue,” spokeswoman Laura Brewer said.

The tech giants have denied antitrust violations. Facebook and Amazon declined to comment on the state effort, and Google pointed to its record of innovation and competition.

Too many cooks?

Given that the federal executive and legislative branches are already investigating Big Tech antitrust issues, however, questions have surfaced about what more state prosecutors could bring to the table.

“Two words: Not much,” said Mark McCareins, clinical professor at Northwestern’s Kellogg School of Management. “They just do not have a track record in these at investigations of blazing their own path and bringing something different to the party than the DOJ or FTC would.”

He said state prosecutors typically defer to the Justice Department on antitrust matters, given their lack of expertise and resources, and that state antitrust laws tend to mirror those of the federal government.

“The Department of Justice antitrust division is a very experienced, sophisticated group of people with economists and trial lawyers and policymakers and forensic experts,” Mr. McCareins said. “Some of these states might have a half a person assigned to antitrust.”

The result is that “they have to go out to the private sectors and hire some private law firm and pay them,” he said. “I mean, these private firms are not working pro bono.”

One reason to involve the states is that their antitrust laws may differ in small but key respects from federal law, said Karen Kovacs North, professor of digital and social media at the University of Southern California’s Annenberg School for Communication and Journalism.

Then there are pre-election politics. “We have to remember that a lot of the people involved at the federal and at the state level are politicians, and part of what happens when we approach election years is that elected officials and other opinion leaders want to make statements,” she said.

A Big Tech investigation represents “an opportunity for a lot of people to make a political statement about a topic that resonates with most Americans because so many people are online,” Ms. North said.

In his July 16 testimony, Adam Cohen, director of Google economic policy, told the House antitrust subcommittee that the company was “proud of our record of continued innovation” despite “intense competition.”

“We have helped reduce prices and expand choice for consumers and merchants in the U.S. and around the world,” Mr. Cohen said. “We have created new competition in many sectors, and new competitive pressures often lead to concerns from rivals. We have consistently shown how our business is designed and operated to benefit our customers.”

Lawmakers have also raised privacy concerns related to tech companies benefiting from consumer information, while Republicans have accused the platforms of bias against their party and against conservatives.

Two decades ago, 20 states joined forces with the Justice Department in the Microsoft antitrust case, but “again, that’s a good example of the states just kind of tagging along hoping that some breadcrumbs fall that they can pick up for their citizenry,” Mr. McCareins said.

In addition to the Justice Department and Congress, the Federal Trade Commission is also involved, reportedly overseeing Facebook and Amazon, while the Justice Department takes the lead on Apple and Google.

Throwing a multistate investigation into the mix could bring critical resources to the effort — or make the situation needlessly complicated.

“I’m just a little hesitant to think that the states would really bring a huge value add to the tech investigation,” Mr. McCareins said. “It could be requesting pretty much the same information that the feds would be requesting, and the question is: Would they be analyzing that same information differently or better? And I have to say, respectfully, probably not.”